Cryptocurrency analyst Benjamin Cowen suggests Bitcoin is entering a correction phase similar to past market cycles, following its volatile movements around the $40,000 level. Cowen highlights historical market corrections as Bitcoin approaches its halving event, scheduled for April 2024.
Bitcoin undergoes a halving every four years, reducing miner rewards by half. The next halving is expected in April, and Cowen notes that corrections typically occur before halving, testing Bitcoin’s 100-week simple moving average (SMA).
Cowen explains that Bitcoin has tested the 100-week SMA during the pre-halving year or early in the halving year, citing instances in November 2011, early 2016, and March 2020. He argues that these tests often result in a significant drop below the 100-week SMA.
A 45% drop from the 100-week SMA’s level of $28,176 would bring Bitcoin down to $15,355, which is lower than its previous lowest levels, according to Cowen’s analysis.
In conclusion, Cowen predicts that if the current cycle mirrors past ones, Bitcoin could face a 45% decline below the 100-week SMA, potentially falling to $15,355 before the upcoming halving.